Lopez v. Dairyland Ins. Co.

Citations: 890 P.2d 192; 18 Brief Times Rptr. 1434; 1994 Colo. App. LEXIS 247; 1994 WL 460739Docket: 93CA1555

Court: Colorado Court of Appeals; August 25, 1994; Colorado; State Appellate Court

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In the case of Neomi Lopez v. Dairyland Insurance Company, the Colorado Court of Appeals upheld a summary judgment favoring Dairyland Insurance. The plaintiff, Neomi Lopez, sought uninsured motorist benefits after being injured in an accident caused by Tom Valdez, who was driving a car owned by Mary Valdez. Tom Valdez was specifically excluded from coverage under Dairyland's insurance policy. The court ruled that the exclusionary clause clearly stated that "this policy won't provide any insurance when the motor vehicle is being driven by Tom Valdez," leading to the conclusion that all types of insurance, including uninsured motorist coverage, were excluded when he operated the vehicle. The court affirmed that the terms of the insurance policy defined the rights and obligations of the parties and that the unambiguous nature of the exclusion must be enforced. The court referenced statutory provisions allowing insurers to exclude drivers from coverage based on their driving records and confirmed that an exclusion in the policy was valid. As a result, Lopez's claim for uninsured motorist benefits was denied.

Plaintiff argues that the definitions of uninsured motor vehicles and related exclusions in the policy conflict with the excluded driver endorsement, which should necessitate coverage. However, the court disagrees. The policy's uninsured motorist provision promises to pay for damages from bodily injury caused by an uninsured vehicle, with definitions including vehicles lacking bodily injury insurance and those denied coverage by their insurer. The policy explicitly excludes vehicles owned or insured by the policyholder from being considered uninsured. 

The court emphasizes that insurance contract language must be interpreted as a whole, according to Security Insurance Co. v. Houser. The excluded driver endorsement effectively revokes all coverage, including uninsured motorist coverage, when the excluded driver operates the vehicle, as supported by Sersion v. Dairyland Insurance Co. In contrast, the Nissen case, cited by the plaintiff, involved conflicting provisions without an excluded driver endorsement and did not support the plaintiff's position, as the endorsement here clearly negates coverage.

The court notes that the General Assembly has permitted insurance companies to exclude coverage for vehicles operated by excluded drivers, which is relevant to this case. Additionally, Mary Valdez, the insured, did not have a reasonable expectation of coverage for Tom Valdez, her excluded driver, as she intentionally excluded him to avoid premium increases. Since she did not pay for coverage for Tom Valdez and did not intend to benefit third parties while he was driving, the plaintiff cannot claim to be an intended beneficiary. Furthermore, if Mary Valdez were a passenger, she would also be ineligible for uninsured motorist benefits. The ruling clarifies that the insurance policy remains valid and not illusory.

Defendant's denial of coverage based on the excluded driver endorsement does not create a conflict within the policy. The endorsement clearly states that the policy does not provide insurance when Tom Valdez is driving. The second sentence, indicating potential responsibility for payments if an accident occurs with Valdez driving, is not considered ambiguous, as similar provisions have been ruled unambiguous in prior cases. 

Plaintiff's argument that allowing the defendant to exclude uninsured motorist coverage for innocent passengers contradicts public policy is rejected. The purpose of uninsured motorist coverage is to protect insured individuals from financially irresponsible drivers, but the plaintiff does not qualify as an "insured" under the policy when Valdez is driving, as neither he nor the vehicle is covered. A court ruling confirms that insurers can exclude coverage for claims arising from excluded drivers, supported by legislative intent.

The uninsured motorist statute requires coverage offers but allows policyholders to reject it. Since carrying such coverage is not mandatory, excluding it for a specific excluded driver does not violate public policy. Most jurisdictions have upheld similar exclusions for innocent passengers. Consequently, the court concludes that the plaintiff cannot recover uninsured motorist benefits as a passenger in a vehicle driven by an excluded individual. The judgment is affirmed, with concurrence from NEY and ROTHENBERG, JJ.